Options Trading News

October 16, 2013  Wed 3:16 AM CT

Abbott Laboratories drew put buying yesterday ahead of its earnings report this morning.

optionMONSTER's Depth Charge system shows that 12,200 October 31 puts were purchased for the ask price of $0.04 yesterday. This is clearly a new position, as open interest in the strike was just 291 contracts before the trade appeared.

The puts were not tied to any corresponding stock trades identified by our systems. The delta of the options is just 0.06, suggesting that there is just a 6 percent probability that they will be in the money upon expiration at the end of this week. The trader could be making an outright bearish bet or hedging a long position. (See our Education section)

ABT was down 0.85 percent to $33.71 yesterday after bouncing off support at $33 last week. The drug maker hasn't been below $31 since the end of 2012.

More than 24,000 ABT options changed hands yesterday, about 5 times its daily average for the last month.
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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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